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COVID causes dip in migration: Higher wage pressure likely

July 30, 2021
Region:
Net migration towards Germany was much lower in 2020 than pre-COVID. The migration flows from outside of the EU were particularly hampered whereas migration within the EU fell by 'only' 5% compared to 2019. As a consequence, the new demand for housing was much lower than in previous years which helped to reduce the housing shortage. By contrast, the lack of qualified and non-qualified workers in the labour market has become more severe through the pandemic. [more]

More documents about "Macroeconomics"

303 Documents
September 8, 2021
Region:
1
The consequences of the COVID-19 pandemic, ambitious climate policies, persistently negative interest rates, and large-scale security purchases by the ECB are increasingly raising the issue of a fair distribution. Policymakers tend to focus on the symptoms in order to appease their voters – and in doing so, they often neglect the root causes. [more]
July 27, 2021
Region:
2
The recent flood caused by heavy rain was among the most severe natural disasters hitting Germany since reunification. More than 170 people lost their lives and many private homes and public buildings, roads and municipal infrastructure were destroyed. Since the flooding occurred in regions with low industrial density, the expected negative impact on overall economic activity, in particular on industrial production, should be relatively limited. Still, the regional impact on agricultural production (such as wine-growing) might be significant. Some of the most recent polls already fully capture post-flood views. As expected, there is no big shift in voter preferences. The events will likely confirm voters' previous choices. [more]
July 22, 2021
Region:
3
Germany has weathered the COVID-19 crisis better than most other EMU partners. With a much smaller output gap and additional headwinds from several structural trends it is more prone to experience higher inflation, in fact, it already has. Given that the ECB will aim its policy towards the EMU average inflation, German inflation could exceed the 2% mark for several years, without triggering an ECB policy response. The ECB's new strategy with the increased 2% symmetric inflation target - implying the acceptance of inflation overshoots - and its announced preparedness to wait until it is fully convinced that its policy has worked before adjusting its policy, make such a scenario even more likely. [more]
June 21, 2021
Region:
4
Since the start of the COVID-19 pandemic the US has launched fiscal packages worth USD 5.3 trillion (25.5% of GDP). With new fiscal plans in the pipeline the total stimulus could even exceed USD 9 trillion (or 40% of 2020 GDP). Although the success of this bold US experiment is far from certain, it has started a new trend in fiscal policies. As low interest rates have depressed governments’ interest bills – despite surging debt – many observers advocate to make greater use of deficit spending for funding a public investment campaign over the next decade. Given weak growth prospects, restoring debt sustainability seems a Herculean task for high debt countries. But even some “fiscally prudent” countries like Germany face severe fiscal challenges due to rapid population ageing. [more]
June 10, 2021
Region:
5
Q2 GDP should be o.k., despite April’s little stumble. Strong external demand and depleted finished goods inventories suggest a strong bounce back once current supply constraints ease. Consumers’ economic outlook and income expectations are improving. Together with an expected normalization of the savings rate that should provide a strong underpinning for consumption growth. We stick to our Q2 GDP forecast of close to 2% qoq and 4% for the whole year. The rate of inflation has been rising sharply since the start of 2021. With price dynamics continuing to outstrip expectations and given the prospect of stronger economic recovery in the summer, we now expect the annual average CPI inflation rate to rise to 2.8% in 2021, monthly numbers could even touch 4%. [more]
May 7, 2021
Region:
7
The catalysts for a strong expansion of the German economy during the summer half are falling into place: Global demand is picking up strongly and the vaccination momentum is finally accelerating. Given the slightly smaller than expected drop of Q1 GDP (-1.7%) and upward revisions to H2 2020, we have lifted our GDP forecast for 2021 from 3.7% to 4.0%. Meanwhile election polls are hanging firmly in the balance. The nominations of Annalena Baerbock and Armin Laschet as chancellor candidates have clearly helped the Greens to gain ground. The current shift in voters’ sentiment allows for a whole bunch of coalition options. [more]
April 28, 2021
Region:
8
We compare the current debate with the discussion about the introduction of the computer in the 1980s. Then as now, positive and negative effects on a macroeconomic level could almost cancel each other out at first. Accordingly, we anticipate that the question of productivity is only likely to be answered in some years’ time. [more]
March 23, 2021
Region:
9
The federal government will present a supplementary budget for 2021, which would be the third supplementary budget over the past year. The volume could reach as much as EUR 60 bn (1.7% of GDP). As a result, 2021 net federal borrowing could possibly rise to as much as EUR 240 bn (6.8% of GDP), an all-time high in German history. We still stick with our 5.9% headline deficit forecast for the general government level as we doubt that all the money will be spent. This implies a structural deficit of nearly 5% of GDP this year (2020: -1.8% of GDP). [more]
March 9, 2021
Region:
10
At the onset of this decisive election year, Germany finds itself confronted with an increasingly multipolar world, a weakened liberal, rule-based world order and rapid technological change. By applying the concept of a SWOT analysis, we aim at kicking off a debate about possible trajectories for the German economy in the post-Merkel era. As key threats to Germany’s "business model" (export-driven with a strong innovative industrial base), we identify (i) a continued erosion of the liberal rule-based trading and investment order and (ii) the falling behind in the global tech race with respect to Green-tech, AI and IoT. By plotting these two threats on separate axes, we then develop four scenarios and identify key drivers that will define Germany‘s position on these axes. For the new government complacency or reactive policies are no options – "High-Tech Made in Germany" might turn out to be an upside scenario. Strong reform effort of both the government and corporate sector is needed in order to secure Germany’s place in the "best-of-all-worlds" scenario. This requires a proper allocation of R&D investments, reaping the benefits of industrial data and an accelerated diffusion of cross-sectoral technologies like AI. [more]
March 1, 2021
Region:
11
The COVID-19-related restrictions on German public life in the winter half of 2020/21 have again noticeably limited the consumption possibilities of private households. Large parts of brick and mortar retail trade as well as service businesses relying on personal interaction had to close, tourism and most of the hospitality industry lie fallow. The unwinding of this pent-up demand will be key to a post-lockdown recovery. But how much momentum can be expected from a meltdown of additional savings induced by the COVID-19 restrictions? To quantify an answer to this question, we present two scenarios. A conservative scenario assumes that about 30% of additional savings will flow back into private consumption in 2021, while almost 70% would remain in household deposits or assets. In an upside scenario with 40% of the additional savings flowing back into spending in 2021 already, our private consumption forecast would be lifted by a good 1pp providing a ½ pp upside for German GDP in 2021. [more]
February 25, 2021
Region:
12
The Jan print of 1% yoy surprised massively to the upside, in part due to one-offs. But the strong rise in core goods prices begs the question whether the Jan readings could herald stronger underlying inflation dynamics. There are still strong arguments for a continuation of structurally low inflation dynamics. However, we see risk that price dynamics could strengthen more strongly through impaired supply conditions. Overall, we now project the inflation rate to average 2.0% in 2021. Towards the end of 2021 the headline rate could spike to as much as 3% before easing to 1 ½% in Q1 2022. [more]
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